Cleveland Cliffs resets the Mesabi Iron Range

PHOTO: Erik Drost, Flickr CC-BY
Aaron J. Brown

Aaron J. Brown is an Iron Range blogger, author, radio producer and columnist for the Mesabi Tribune.

Before March 2, 1901 northern Minnesota served as a battleground for two immutable titans of industry, Andrew Carnegie and John D. Rockefeller. At stake was control of the world’s richest untapped source of iron ore and the nation-building steel it could produce. The scene grew chaotic with new mines opening, closing, and changing hands all the time.

But then one early spring day Carnegie’s holdings joined with J.P. Morgan’s money and “Judge” Elbert Gary’s leadership to create U.S. Steel. Rockefeller’s mines, now doing business as the Oliver Iron Mining Company, formed as a subsidiary to “The Corporation,” the nickname given to a company now bigger than any that had ever existed on Earth.

The rest is quite literally history. Though U.S. Steel now casts a mere shadow of its past self, the company remained the largest single producer of iron ore on the Mesabi Iron Range for almost 120 years.

All that changed Sept. 28 of this year when the venerable iron ore producer Cleveland-Cliffs announced a $1.4 billion deal to buy ArcelorMittal USA, the American subsidiary of the world’s largest steel company. That date may prove to be just as consequential for the future of Mesabi Range iron mining as U.S. Steel’s birthday in 1901.

Cliffs’ takeover of ArcelorMittal’s assets, including Hibbing Taconite and the Minorca Mine near Virginia, makes it the largest steelmaker and iron miner in North America. Locally, Cliffs now controls four of the Minnesota’s six active iron mines. Though Cliffs has long been a steady presence on the American industrial scene it has never been such an undisputed leader. These are new times.

This monumental action gives the Iron Range cause for celebration and concern alike.

The good news is that Cleveland Cliffs is a respected American company with a long resume. Cliffs’ labor and environmental record is among the best in the world compared to other mining and steel companies.

Furthermore, CEO Lourenco Goncalves has proven himself a capable leader, bringing the company out of what seemed like crippling debt into a position to expand. Goncalves once drew headlines for his bombastic and sometimes outrageous comments, but now he’s written a very serious entry in the encyclopedia of mining history.

It had long seemed like ArcelorMittal might be the company to take over the Iron Range. After all, Lakshmi Mittal’s enormous corporation seemed to have global leverage. But Mittal’s biggest mine was Hibbing Taconite which is running out of ore. Goncalves has the solution: ore that Cliffs controls near Nashwauk.

This week Goncalves was quick to highlight the situation in Nashwauk where we find the former Essar Steel project still suspended in limbo. Owners of some of the mining land signed a deal with Cliffs hoping to expedite its takeover of this unsuccessful attempt at an Iron Range mining and steelmaking facility. That effort was initially stymied by Essar, its successors and creditors. They sit on leases granted by the State of Minnesota.

It’s hard to imagine the state being able to hold off Cliffs much longer, especially if Hibbing Taconite is at stake.  Promises of new jobs can be strung along for decades, but the loss of existing ones generally scares politicians into immediate action.

History shows that adaptation to new technology allows mines to stay open longer. That’s arguably the best aspect of this story, in that Cliffs has far out-developed U.S. Steel and others in new iron ore technology.

“[Acquiring ArcelorMittal USA] means our long-term commitment to the Iron Range is as strong as ever, said Goncalves in a Sept. 29 Mesabi Tribune story by Jerry Burnes. “We will continue to operate. We will continue to employ people and develop the business.”

But there is always a cost, usually in the form of a smaller workforce. So while a Cliffs-dominated Iron Range will still support good mining jobs, it won’t support our entire economy any better than what we’ve endured for the last four decades.

While Cliffs appears poised for corporate success, this company won’t always need as much traditional taconite pellets as it currently produces. New direct-reduced iron products will become more popular. That might mean a new HBI plant on the Iron Range “some day” as Goncalves hints, but it will also probably mean the eventual closure of one or two existing taconite plants. New jobs, yes, but likely filled by people who lost old ones.

Furthermore, as the new king of the hill, Cliffs will soon feel the same economic pressures that caused such trouble for ArcelorMittal and U.S. Steel. Goncalves is betting on the long term stability of the U.S. economy and on his company’s diverse portfolio of iron and steel products. When times are good such wagers seem like strokes of genius. But the Iron Range knows that these bets produce losers, too, and they tend to be workers and communities left out when times turn bad.

As citizens of the Iron Range we would be well served to celebrate Cleveland Cliffs’ success but maintain efforts to diversify and expand our economy. Independence is good for corporations. It’s good for communities, too.

Aaron J. Brown is an author and college instructor from northern Minnesota’s Iron Range. He writes the blog and co-hosts the podcast “Power in the Wilderness” on Northern Community Radio. This piece first appeared in the Sunday, Oct. 4, 2020 edition of the Mesabi Tribune.



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